Correlation Between Ab International and Growth Allocation

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Can any of the company-specific risk be diversified away by investing in both Ab International and Growth Allocation at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ab International and Growth Allocation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab International Growth and Growth Allocation Fund, you can compare the effects of market volatilities on Ab International and Growth Allocation and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ab International with a short position of Growth Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab International and Growth Allocation.

Diversification Opportunities for Ab International and Growth Allocation

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between AWPIX and Growth is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Ab International Growth and Growth Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Allocation and Ab International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ab International Growth are associated (or correlated) with Growth Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Allocation has no effect on the direction of Ab International i.e., Ab International and Growth Allocation go up and down completely randomly.

Pair Corralation between Ab International and Growth Allocation

Assuming the 90 days horizon Ab International is expected to generate 4.52 times less return on investment than Growth Allocation. In addition to that, Ab International is 1.67 times more volatile than Growth Allocation Fund. It trades about 0.03 of its total potential returns per unit of risk. Growth Allocation Fund is currently generating about 0.25 per unit of volatility. If you would invest  1,346  in Growth Allocation Fund on April 15, 2025 and sell it today you would earn a total of  28.00  from holding Growth Allocation Fund or generate 2.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Ab International Growth  vs.  Growth Allocation Fund

 Performance 
       Timeline  
Ab International Growth 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Ab International Growth are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ab International may actually be approaching a critical reversion point that can send shares even higher in August 2025.
Growth Allocation 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Growth Allocation Fund are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Growth Allocation may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Ab International and Growth Allocation Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ab International and Growth Allocation

The main advantage of trading using opposite Ab International and Growth Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab International position performs unexpectedly, Growth Allocation can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Growth Allocation will offset losses from the drop in Growth Allocation's long position.
The idea behind Ab International Growth and Growth Allocation Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.

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